Property Prices in Indonesia

[Daniel50]

I have never been able to understand (I am not at genius level yet ) the price/cost of housing in Indonesia eg. perhaps 2 working middle class people could afford a mortgage on a house for 400 million. But it is difficult in may areas to find houses for these prices. Even recently my wife noticed someone she knows post a 100 sq metre house, in Jogja , 3 bedroom 2 bath for 1.2 billion. But most people in Indonesia can not afford this so what is driving these prices? Who owns all these properties?

 

[Bad_azz]

Prices seem to have gone up a lot recently in our area.
This is probably due to development in the area. We are getting new roads in & a few new housing complexes popping up.
Our house /land has tripled in price since we bought it 4 years ago. I like to think I was canny in choosing the location- easy access to the city, but in a fairly quiet village that is on the road between 2 tourist attractions. When we bought, I figured that the city is already full up & with the Indonesian culture being very much ; get married & have kids, I assumed (correctly) that the city is going to have to spread outwards & upwards.

There are still some areas with cheap land to be had but they tend to be prone to floods/landslides/ bad water/ drought in dry season etc.
That is in Bandung, I can't say for other places.

**worth noting is that the land price went up by 40% as soon as I moved in (the same month) - that was a source of much amusement. It was very much as though the prestige of having a whitey in the area had a direct impact on the land price.
As for affording the payments - often families will pool their resources to pay the dp & installments. My in laws did. One of the sisters bought a house & 9 of them live there- it only has 5 rooms & a kitchen. What we would call a 2 up 2 down.

What I find harder to understand is how many people can afford cars.

 

[Bad_azz]

Also worth noting- (re your example of your wife's friends) the asking price for a house for sale & the price it actually sells at are likely to be a chasm apart.

 

[Jamu]

Cars and motorbikes are purchased on credit with minimal down payment. Property prices have indeed gone up dramatically as the domestic Indonesian economy has boomed. Stroll around the malls of Jakarta and you will see loads of Indonesians who can afford to purchase top end designer goods and eat out at expensive restaurants. Obviously the people are less wealthy in the sticks but the country is nonetheless developing a solid and relatively prosperous middle class. Also worth noting that property is a great hedge against inflation so it tends to get priority as an investment option.

 

[Daniel50]

Yes moving in and pooling resources could work.

I don't think the growing middle class are shopping designer in the malls along with buying properties and cars. The middle class probably earn about 3 to 10 million per month. That is not exactly floating in cash. It seems like property prices have gone up a lot. So I am still somewhat puzzled who is buying. I know some Indonesians have multiple properties and many put their money in property vs other investments. But I don'rt know how the middle class are driving those prices esp. when you look at salaries for most professionals. To me the numbers don't make sense.

 

[scouser59]

South bali is "dropping like a stone" or not selling , I have a few acquaintances who sold villas minus 40% ++ to asking price , ubud is still quite strong , in the village I live in nothings moving 1 guy sold land with a free house !
Unfortunately with the usual poor build quality buying is a scary business .

 

[Daniel50]

Yes, I guess some houses sit on the market longer ( somebody mentioned a family in a high class area of Jakarta trying to sell their house for 11 years before it sold) and there tend to be more empty houses. This is just anecdotal evidence on my part.

 

[scouser59]

Yes, I guess some houses sit on the market longer and there tend to be more empty houses. This is just anecdotal evidence on my part.

reality in south bali.

 

[Bad_azz]

South bali is "dropping like a stone" or not selling , I have a few acquaintances who sold villas minus 40% ++ to asking price , ubud is still quite strong , in the village I live in nothings moving 1 guy sold land with a free house !
Unfortunately with the usual poor build quality buying is a scary business .

Didn't the bali market get oversaturated though? Kind of a victim of its own success?

Bandung is quite expensive, for what many outsiders consider some backwater town. It is where Indonesians travel to though- one comparison could be of Bandung being the Lake District & Bali being Benidorm

 

[scouser59]

Indeed south bali is overbuilt with inferior quality houses , and it still continues unabated , typically with 2 week guarantees which is crazy , in my view , jeez I got a 3 year guarantee on my car , hotels normally only have a 3 month guarantee , I believe there are more normal property construction guarantees ie around 10 to 15 years in surabaya from a building company , which I am still researching , but honestly I prefer to rent at the moment because it is far cheaper than the maintenance, the owner had to completely replace the roof on our place and its only 10 years old , unbelievable !

 

[Anglian]

It is odd here, D'diamond the complex near me were selling houses 200 million for one if you bought two they would give you one free, but what strikes me as odd is that some of the residents have cars that are more expensive than their house

 

[Smallworld]

I have never been able to understand (I am not at genius level yet ) the price/cost of housing in Indonesia eg. perhaps 2 working middle class people could afford a mortgage on a house for 400 million. But it is difficult in may areas to find houses for these prices. Even recently my wife noticed someone she knows post a 100 sq metre house, in Jogja , 3 bedroom 2 bath for 1.2 billion. But most people in Indonesia can not afford this so what is driving these prices? Who owns all these properties?

Just to clarify:

Min salary eg. 2 jt x 12 = 24 jt / year x 10 years mortgage =240 jt x 2 people 480 jt. For a couple on MIN SALARY not middle working class!

Here in Cikarang the MIN SALARY is around 3+ jt. so = 360 x 2 people 720 jt for 10 years.

Middle class is starting maybe somewhere like 10 jt / per month? (this is my guess only) 10 jt x 12 (months) x 10 years = 1,2 M / one person working.

I can see a lot of development sings here in Cikarang with prices 400-600-800 jt. Eg. Meikarta 120 jt you can own an apartament or with 2jt. cicilan/bulan. Not sure about square meters probably very small.

The house you have mentioned will be bough by a doctor, accountant /IT professional in mid size international company, gov. official, some business owner. Not by a forklift driver, truck driver ect...

"But most people in Indonesia can not afford this so what is driving these prices? Who owns all these properties?"

And....?
Who owns houses for workers in UK those that they sell later on as new development - private investors, developers, funds, goverment.

Can a non-skilled factory worker in UK on 7.30 pound/hrs buy 1 mln pound property? No, why? I don't think he can even afford to get a 200 000 property. More likely they will aim to get 90-120 000 max. If they will not end up in social housing or renting out flat/house all their life. So what is driving those absurd property prices in UK? Maybe the same things that drive prices over there will apply here in Indonesia.

 

[scouser59]

It is odd here, D'diamond the complex near me were selling houses 200 million for one if you bought two they would give you one free, but what strikes me as odd is that some of the residents have cars that are more expensive than their house

Thats a good deal anglian , buy 2 get 1 free.

 

[Anglian]

Thats a good deal anglian , buy 2 get 1 free.

Wish I had, I was in Balikpapan at the time so missed the offer, land here now is 5.5 million a metre, when we built our house 15 years ago the land was 250,000rp a metre

My sister lives in Holt, Norfolk, they are building an estate with 4 bedroom houses £450,000, no idea who working in Norfolk earns a salary to get a mortgage on those house prices

 

[Daniel50]

Just to clarify:

Min salary eg. 2 jt x 12 = 24 jt / year x 10 years mortgage =240 jt x 2 people 480 jt. For a couple on MIN SALARY not middle working class!

Here in Cikarang the MIN SALARY is around 3+ jt. so = 360 x 2 people 720 jt for 10 years.

Middle class is starting maybe somewhere like 10 jt / per month? (this is my guess only) 10 jt x 12 (months) x 10 years = 1,2 M / one person working.

I can see a lot of development sings here in Cikarang with prices 400-600-800 jt. Eg. Meikarta 120 jt you can own an apartament or with 2jt. cicilan/bulan. Not sure about square meters probably very small.

The house you have mentioned will be bough by a doctor, accountant /IT professional in mid size international company, gov. official, some business owner. Not by a forklift driver, truck driver ect...

Well people don't get mortgages interest free so pretty hard to afford most homes. Plus they have other expenses. I believe the middle class about 2 years ago was roughly 4 to 8 or 9 million per month. The upper middle class earn more. Of course most people can not afford a place in London either but London allows for foreign ownership and Indonesia does not, so that is one huge difference. In Sydney, London, Vancouver etc. it is foreign investment that drove up a lot of the prices. Indonesia does not have this money pouring in. I am still not sure who affords a lot of the properties, certainly not the middle class. And accountants/IT/or most Drs. don't make that much either.

But the 2 for 1 deal sounds pretty good.

 

[Anglian]

I'm looking for a corrupt politician or customs official to buy my house for10 billion, then I can really retire with my feet up

 

[Davita]

I'm looking for a corrupt politician or customs official to buy my house for10 billion, then I can really retire with my feet up

Then where will you live?
I hear there's many cheap properties in Syria and Northern Iraq....but maybe the yelling of Allah Akbar and the nightly fireworks display will deter living there.

 

[brian@bekasi]

I have never been able to understand (I am not at genius level yet ) the price/cost of housing in Indonesia eg. perhaps 2 working middle class people could afford a mortgage on a house for 400 million. But it is difficult in may areas to find houses for these prices. Even recently my wife noticed someone she knows post a 100 sq metre house, in Jogja , 3 bedroom 2 bath for 1.2 billion. But most people in Indonesia can not afford this so what is driving these prices? Who owns all these properties?

There are people in Indonesia who on face value have modest salaries but receive handsome "gratuities" from a variety of third parties. I would suspect that a lot of the cash from "gratuities" ends up in real estate. Indonesians by nature also look after their families so it would make sense that some of the "gratuities" money is spread around to buy homes for various family members. Obviously this does not account for all.

 

[scouser59]

I'm looking for a corrupt politician or customs official to buy my house for10 billion, then I can really retire with my feet up

Good luck with that ha ha if you find that guy tell him my 10 yr old rusty skywave is up for sale for 500 juta , a good deal ya .

 

[Anglian]

I have a friend in MPR, he has four houses and 3 big cars, he apologies but says you can not help be corrupt as much as he tried

Mind if one of thes corrupt people buy my house and the KPK catch up with them I don't really want to give the money back, but it is amazing the amount of corrupt money floating around